<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


                                   (MARK ONE)


      /X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                               EXCHANGE ACT OF 1934


                       FOR THE PERIOD ENDED MARCH 31, 2000

                                       OR

       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                                EXCHANGE ACT OF 1934


                         COMMISSION FILE NUMBER: 0-28324


                           BIOTRANSPLANT INCORPORATED
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


               DELAWARE                                    04-3119555
     (STATE OR OTHER JURISDICTION OF                    (I.R.S. EMPLOYER
      INCORPORATION OR ORGANIZATION)                   IDENTIFICATION NO.)

                 CHARLESTOWN NAVY YARD, BUILDING 75 THIRD AVENUE
                        CHARLESTOWN, MASSACHUSETTS 02129
                    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)


                                 (617) 241-5200
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


     Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days:
                                    Yes /X/   No / /



          As of May 5, 2000, there were 11,681,174 shares of the Registrant's
Common Stock outstanding.


<PAGE>


                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                                    FORM 10-Q
                                      INDEX

                          PART I. FINANCIAL INFORMATION


<TABLE>
<CAPTION>
                                                                                                                         Page No.
                                                                                                                         --------
<S>      <C>                                                                                                                <C>
ITEM 1.  CONDENSED CONSOLIDATED FINANCIAL STATEMENTS:

         Condensed Consolidated Balance Sheets as of December 31, 1999 and March 31, 2000..............................      3

         Condensed Consolidated Statements of Operations for the three months ended March 31, 1999
                  and 2000, and for the period from inception (March 20, 1990) to March 31, 2000.......................      4

         Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 1999 and 2000,
                  and for the period from inception (March 20, 1990) to March 31, 2000.................................      5

         Notes to Condensed Consolidated Financial Statements..........................................................      6

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                  AND RESULTS OF OPERATIONS............................................................................      8

ITEM 3.  QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS.....................................................     11



                           PART II. OTHER INFORMATION

ITEM 1. - 6. ..........................................................................................................     12

                  SIGNATURES...........................................................................................     13

</TABLE>

                                      2


<PAGE>


PART I. FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                          (A Development Stage Company)

                      CONDENSED CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>

                                                                                               March 31,
                                                                              December 31,       2000
                                                                                  1999        (Unaudited)
                                                                              ------------    ------------
<S>                                                                           <C>             <C>
ASSETS
Current assets:
 Cash and cash equivalents                                                    $ 17,648,789    $ 25,441,738
 Short-term investments                                                          3,718,033       1,593,174
 Other receivables                                                                 400,500
 Prepaid expenses and other current assets                                         169,733         149,026
                                                                              ------------    ------------
  Total current assets                                                          21,937,055      27,183,938

Property and equipment - net                                                     1,482,000       1,414,009
                                                                              ------------    ------------
TOTAL ASSETS                                                                  $ 23,419,055    $ 28,597,947
                                                                              ------------    ------------
                                                                              ------------    ------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
 Current portion of long term debt                                            $    233,333     $   233,333
 Accounts payable                                                                  433,067         346,172
 Accrued expenses                                                                2,516,173       2,232,524
 Deferred revenue                                                                4,125,000       2,636,500
                                                                              ------------    ------------
  Total current liabilities                                                      7,307,573       5,448,529
                                                                              ------------    ------------
 Long-term debt, net of current portion                                            466,667         408,333
                                                                              ------------    ------------
Stockholders' equity:
 Preferred stock, $.01 par value, authorized 2,000,000 shares; issued
  and outstanding - no shares                                                           --              --

 Common stock, $.01 par value, authorized 25,000,000 shares; issued and
  outstanding 10,300,890 shares at December 31, 1999 and 11,661,825 shares
  at March 31, 2000                                                                103,010         116,667
 Additional paid-in capital                                                     72,688,036      82,269,574
 Accumulated deficit                                                           (57,146,231)    (59,645,156)
                                                                              ------------    ------------
  Total stockholders' equity                                                    15,644,815      22,741,085
                                                                              ------------    ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $ 23,419,055    $ 28,597,947
                                                                              ------------    ------------
                                                                              ------------    ------------

</TABLE>

              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.


                                      3


<PAGE>


                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                          (A Development Stage Company)

                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                         Three Months Ended         Cumulative
                                              March 31,               Since
                                         1999           2000        Inception
                                     -----------    -----------    ------------
<S>                                  <C>            <C>            <C>
    Revenues:
     License fees                    $        --    $        --    $ 18,500,000
     Research and development          1,238,500      1,488,500      33,740,475
     Interest income                     225,158        329,414       5,982,253
                                     -----------    -----------    ------------
      Total revenues                   1,463,658      1,817,914      58,222,728
                                     -----------    -----------    ------------

    Expenses:
     Research and development          3,807,809      3,691,182      96,632,740
     General and administrative          546,852        610,578      19,442,573
     Interest                                659         15,080       1,792,572
                                     -----------    -----------    ------------
      Total expenses                   4,355,320      4,316,840     117,867,885
                                     -----------    -----------    ------------

    Net loss                         $(2,891,662)   $(2,498,926)   $(59,645,157)
                                     -----------    -----------    ------------
                                     -----------    -----------    ------------

    Basic and diluted net loss
     per common share                $     (0.34)   $     (0.23)
                                     -----------    ------------
                                     -----------    ------------

    Weighted average common shares
     outstanding                       8,582,859     11,031,315
                                     -----------    ------------
                                     -----------    ------------

</TABLE>

              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.


                                      4


<PAGE>


                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                          (A Development Stage Company)

                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                         Three Months Ended          Cumulative
                                                                             March 31,                 Since
                                                                         1999           2000         Inception
                                                                     -----------     -----------    ------------
<S>                                                                  <C>             <C>            <C>
Cash flows from operating activities:
 Net loss                                                            $(2,891,662)    $(2,498,926)   $(59,645,157)
 Adjustments to reconcile net loss to net cash used in
   operating activities:
     Depreciation and amortization                                        93,976         104,566       3,981,710
     Noncash interest expense                                                 --              --         465,477
     Noncash expenses related to options and warrants                                         --       1,186,785
     Changes in current assets and liabilities:
       Accounts receivable                                              (113,525)         10,175          21,513
       Deposits and prepaid expenses                                     505,160         411,032        (170,539)
       Accounts payable                                                 (181,399)        (86,895)        346,172
       Accrued expenses                                                  369,696        (283,648)      2,232,524
       Deferred revenue                                               (1,125,000)     (1,488,500)      2,636,500
                                                                     -----------     -----------    ------------
     Net cash used in operating activities                            (3,342,754)     (3,832,196)    (48,945,015)
                                                                     -----------     -----------    ------------
Cash flows from investing activities:
 Purchases of property and equipment                                    (142,656)        (36,575)     (4,772,523)
 Disposal of property and equipment, net                                      --              --          28,040
 Purchases of investments                                               (404,136)     (1,594,926)    (71,819,323)
 Proceeds from investments                                             5,086,918       3,719,786      70,226,149
                                                                     -----------     -----------    ------------
     Net cash provided by (used in) investing activities               4,540,126       2,088,285      (6,337,657)
                                                                     -----------     -----------    ------------
Cash flows from financing activities:
 Proceeds from convertible notes payable to stockholders                      --              --       9,400,000
 Payments of long-term debt                                                   --         (58,334)        (58,334)
 Payments of obligations under capital leases                             (2,881)             --      (2,194,210)
 Proceeds from sale/leaseback of equipment                                    --              --         771,968
 Proceeds from long-term debt                                                 --              --         700,000
 Net proceeds from equipment leases                                           --              --       1,422,240
 Net proceeds from sale of redeemable convertible preferred stock             --              --      25,661,526
 Proceeds from sale of common stock                                           75       9,595,194      45,021,220
                                                                     -----------     -----------    ------------
     Net cash provided by (used in) financing activities                  (2,806)      9,536,860      80,724,410
                                                                     -----------     -----------    ------------

Net increase in cash and cash equivalents                              1,194,566       7,792,949      25,441,738

Cash and cash equivalents, beginning of period                        13,168,496      17,648,789              --
                                                                     -----------     -----------    ------------

Cash and cash equivalents, end of period                             $14,363,062    $ 25,441,738    $ 25,441,736
                                                                     -----------     -----------    ------------
                                                                     -----------     -----------    ------------
Supplemental disclosures and noncash transactions:
 Increase in equipment under capital leases                          $        --     $        --    $ (2,210,270)
                                                                     -----------     -----------    ------------
                                                                     -----------     -----------    ------------
 Conversion of convertible notes payable to stockholders and
    Accrued interest into redeemable convertible preferred stock     $        --     $        --    $  9,905,710
                                                                     -----------     -----------    ------------
                                                                     -----------     -----------    ------------
 Conversion of preferred stock into common stock                     $        --     $        --    $ 36,202,290
                                                                     -----------     -----------    ------------
                                                                     -----------     -----------    ------------
 Issuance of warrants                                                $        --     $        --    $    741,737
                                                                     -----------     -----------    ------------
                                                                     -----------     -----------    ------------
 Interest paid during the period                                     $       627     $    15,080    $  1,425,585
                                                                     -----------     -----------    ------------
                                                                     -----------     -----------    ------------

</TABLE>

              The accompanying notes are an integral part of these
                  condensed consolidated financial statements.


                                      5


<PAGE>


                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                          (A Development Stage Company)

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.  OPERATIONS AND BASIS OF PRESENTATION

BioTransplant Incorporated (the "Company") was incorporated on March 20, 1990.
The Company utilizes its proprietary technologies in re-educating the body's
immune responses to allow tolerance of foreign cells, tissues and organs. Based
on this ImmunoCognance-TM- technology, the Company is developing a portfolio of
products designed to treat a range of medical conditions for which current
therapies are inadequate, including organ and tissue transplantation, cancer and
autoimmune disease. BioTransplant's products under development are intended to
induce long-term functional transplantation tolerance in humans, increase the
therapeutic benefit of bone marrow transplants, and reduce or eliminate the need
for lifelong immunosuppresive therapy.

The Company is in the development stage and is devoting substantially all of its
efforts toward product research and development and raising capital. The Company
is subject to a number of risks similar to those of other development stage
companies, including dependence on key individuals and collaborative partners,
competition from larger companies, the development of commercially usable
products, obtaining regulatory approval for products under development, and the
need to obtain adequate additional financing necessary to fund the development
of its products.

The interim financial statements herein have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission ("SEC") and include, in the opinion of management, all
adjustments, consisting of normal, recurring adjustments, necessary for a fair
representation of interim period results. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. The results for the interim periods
presented are not necessarily indicative of results to be expected for the
fiscal year or any future period. These condensed consolidated financial
statements should be read in conjunction with the audited consolidated financial
statements and the notes thereto included in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999, as filed with the SEC.

2.  CASH EQUIVALENTS AND INVESTMENTS

Cash equivalents include short-term, highly liquid investments with original
maturities of less than three months from the date of purchase. Short-term
investments consist primarily of corporate notes and securities issued by the
United States Treasury or other United States government agencies with original
maturities of greater than three months and remaining maturities of less than
one year. Long-term investments consist primarily of corporate notes with
remaining maturities of greater than one year. In accordance with Financial
Accounting Standards Board Statement No. 115, "Accounting for Certain
Investments in Debt and Equity Securities", the Company's investments are
classified as held-to-maturity and are stated at amortized cost, which
approximates market value.

The Company held the following investments at December 31, 1999 and
March 31, 2000:

<TABLE>
<CAPTION>

                                                             December 31,      March 31,
                                                                 1999            2000
                                                             ------------     -----------
<S>                                                          <C>              <C>
    Cash and cash equivalents:                               $17,648,789      $25,441,738
                                                             ------------     -----------
    Short-term Investments:
      Corporate Bonds (average maturity of 4 months)                  --      $ 1,593,174
      Commercial Paper (average maturity of 2 months)        $ 3,718,033               --
                                                             ------------     -----------

    Total cash and cash equivalents and investments          $21,366,822      $27,034,912
                                                             ------------     -----------
                                                             ------------     -----------

</TABLE>

                                      6


<PAGE>


                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                          (A Development Stage Company)

         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
                                   (Unaudited)


3.  NET LOSS PER COMMON SHARE

Net loss per common share is based on the weighted average number of common
shares outstanding during the periods presented, in accordance with Financial
Accounting Standards Board Statement No. 128, "Earnings Per Share". Diluted net
loss per common share is the same as basic net loss per common share as the
inclusion of stock issuable pursuant to options and warrants would be
antidilutive. Antidilutive securities not included consist of 962,530 shares
issuable pursuant to common stock options and 327,504 shares issuable pursuant
to common stock warrants.

4.  REVENUE RECOGNITION

Substantially all of the Company's license and research and development revenues
are derived from two collaborative research arrangements. Annual research and
development payments are recognized on a straight-line basis over the period of
the contract, which approximates when work is performed and costs are incurred.
License fee revenue represents technology transfer fees received for rights to
certain technology of the Company. License fees are recognized as revenue when
earned. Deferred revenue represents amounts received in advance of revenue
recognition for research and development. Research and development expenses in
the accompanying consolidated statements of operations include funded and
unfunded expenses.

Staff Accounting Bulletin No. 101 (SAB 101), "Revenue Recognition", was issued
in December 1999. SAB 101 will require companies to recognize certain upfront
non-refundable fees and milestone payments over the life of the related alliance
when such fees are received in conjunction with alliances which have multiple
elements. The Company is required to adopt this new accounting principle through
a cumulative charge to the statement of operations, in accordance with
Accounting Principles Board Opinion (APB) No. 20, "Accounting Changes", no later
than the second quarter of fiscal 2000. The Company believes that the adoption
of SAB 101 will have an impact on its future operating results as it relates to
the upfront non-refundable payments and milestone payments received in
connection with alliances (see Note 7). The historical financial statements
reflect payments of approximately $18.5 million received through December 31,
1999. Based on guidance currently available, upon adoption of SAB 101, the
Company will be required to record these fees as revenue over the life of the
related agreement, as defined.

5.  TERM NOTE

    In September 1997, the Company entered into a term note with a bank, whereby
the Company may borrow up to $500,000 for certain equipment and fixtures during
a specified drawdown period, after which time the outstanding balance will
become payable in 36 equal monthly principal installments plus interest. During
1999, the Company extended the drawdown period and increased its availability to
$1.0 million under the same conditions of this term note. Borrowings under the
term note bear annual floating interest at the bank's Prime Rate (9.0% at
March 31, 2000) during the drawdown period with an option to convert during the
repayment period to an annual fixed rate at the three-month London Interbank
Offered Rate ("LIBOR") (6.12% at March 31, 2000) plus 2.25%. Borrowings under
the term note are secured by equipment and fixtures purchased using the proceeds
of the note. There were $642,000 in borrowings outstanding under this term note
at March 31, 2000.

6.  SEGMENT REPORTING

The Company has adopted Financial Accounting Standards Board Statement No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("FAS
131") which establishes standards for reporting information about operating
segments. In accordance with SFAS 131, the Company believes that it operates in
one operating segment.

7. COMPREHENSIVE INCOME
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130 establishes
standards for reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in a full set of general-purpose
financial statements. This statement is effective for fiscal years beginning
after December 15, 1997. The Company adopted this statement for the year ended
December 31, 1998 with no material impact on the Company's financial statements
as there are no material differences between the Company's reported income and
comprehensive income for all periods presented.


                                      7


<PAGE>


                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                          (A Development Stage Company)

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

OVERVIEW

    Since commencement of operations in 1990, the Company has been engaged
primarily in the research and development of pharmaceutical products and systems
to enable the body's immune system to better tolerate the transplantation of
foreign cells, tissues and organs. The major sources of the Company's working
capital have been the proceeds from sales of equity securities, sponsored
research funding and license fees and capital lease financings. The Company has
not generated any revenues from the sale of products to date, and does not
expect to receive any product revenues for several years, if ever. The Company
will be required to conduct significant additional research, development,
testing and regulatory compliance activities that, together with general and
administrative expenses, are expected to result in significant and increasing
operating losses for at least the next several years.

    In 1993, and as amended and restated in September 1995, the Company and
Novartis entered into a collaboration agreement for the development and
commercialization of xenotransplantation products utilizing gene transduction.
Under the agreement, Novartis committed research funding and license fees
through March 1998 of $30.0 million, all of which had been received as of
December 31, 1997. Novartis has also agreed to fund certain development and
premarketing costs and products which may be developed as a result of the
collaboration, portions of which, under certain circumstances, may be repayable
from the Company's operating profits from sales of any such products.

    In October 1997, the Company and Novartis expanded their relationship by
entering into a collaboration and license agreement to develop and commercialize
xenotransplantation products utilizing the Company's proprietary mixed bone
marrow chimerism technology. Under the agreement, the Company may receive from
Novartis research funding, license fees, and milestone payments of up to $36.0
million assuming the agreement continues for its full term and certain research
objectives are met. As of March 31, 2000, research funding of $13.5 million,
license fees of $4.0 million and milestone payments of $2.5 million had been
received. In addition to research funding, Novartis will also fund certain
development and premarketing costs of such products, portions of which may be
repayable under certain circumstances.

    In October 1995, the Company and MedImmune entered into a collaborative
research agreement for the development of products to treat and prevent organ
rejection. MedImmune paid the Company a $2.0 million license fee at the time of
execution of the agreement, and agreed to fund and assume responsibility for
clinical testing and commercialization of BTI-322 and other related products.
MedImmune has provided $2.0 million of non-refundable research support and has
agreed to make milestone payments which could total up to an additional $11.0
million. Any milestone payments which are received are repayable from royalties
on such products.

RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999

Revenues increased to $1.8 million for the three months ended March 31, 2000
from $1.5 million for the three months ended March 31, 1999. The increase in
revenues was primarily due to $1.5 million in sponsored research funding from
Novartis during the three months ended March 31, 2000, compared to $1.2 million
in sponsored research funding from Novartis during the three months ended
March 31, 1999. Additionally, interest income increased to $329,000 for the
three months ended March 31, 2000 from $225,000 for the three months ended
March 31, 1999. The increase was due primarily to higher cash balances available
for investment as well as rising interest rates.

Research and development expenses decreased to $3.7 million for the three months
ended March 31, 2000 from $3.8 million for the three months ended March 31,
1999. This decrease was primarily due to decreased levels of external research
support.

General and administrative expenses increased to $611,000 for the three months
ended March 31, 2000 from $547,000 for the three months ended March 31, 1999.
This increase was primarily due increases in the Company's general corporate
expenditures in the three months ended March 31, 2000 compared to the three
months ended March 31, 1999.

As a result of the above factors the Company generated a net loss for the
three months ended March 31, 2000 of $2.5 million, or $0.23 per share,
compared to a net loss of $2.9 million, or $0.34 per share for the three
months ended March 31, 1999.

                                      8


<PAGE>


                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                          (A Development Stage Company)

LIQUIDITY AND CAPITAL RESOURCES

Since its inception, the Company's operations have been funded principally
through the net proceeds of an aggregate of $80.1 million from sales of equity
securities. The Company has also received $49.7 million from research and
development and collaboration agreements with Novartis, $4.0 million from an
alliance agreement with MedImmune and $2.9 million in equipment financing. The
proceeds of the sales of equity securities, equipment financing, and cash
generated from the corporate collaborations with Novartis and MedImmune have
been used to fund operating losses of approximately $59.6 million and the
investment of approximately $5.3 million in equipment and leasehold improvements
through March 31, 2000. During 1999, the Company extended and increased its term
note with a bank from $500,000 to $1.0 million for certain equipment and
fixtures borrowing. There were $642,000 in borrowings outstanding under this
term note March 31, 2000. The Company had no significant commitments as of
March 31, 2000 for capital expenditures.

    On February 11, 2000, the Company issued and sold to a group of investors an
aggregate of 1,215,000 shares of its common stock, $.01 par value per share, at
a purchase price of $8.00 per share, for net proceeds to the Company of
approximately $9.0 million.

    The Company has entered into sponsored research and consulting agreements
with certain hospitals, academic institutions and consultants, requiring
periodic payments by the Company. Aggregate minimum funding obligations under
these agreements, which include certain cancellation provisions, total
approximately $4.4 million, which includes approximately $4.1 million in 2000.

    The Company had cash and cash equivalents and investments of $27.0 million
as of March 31, 2000.

    The Company anticipates that its existing funds should be sufficient to fund
its operating and capital requirements as currently planned through 2001.
However, the Company's cash requirements may vary materially from those now
planned due to many factors, including, but not limited to, the progress of the
Company's research and development programs, the scope and results of
preclinical and clinical testing, changes in existing and potential
relationships with corporate collaborators, the time and cost in obtaining
regulatory approvals, the costs involved in obtaining and enforcing patents,
proprietary rights and any necessary licenses, the ability of the Company to
establish development and commercialization capacities or relationships, the
costs of manufacturing and other factors.

    The Company expects to incur substantial additional costs, including costs
related to research and development activities, preclinical studies, clinical
trials, obtaining regulatory approvals, manufacturing and the expansion of its
facilities. The Company will need to raise substantial additional funds, through
additional financings including public or private equity offerings and
collaborative arrangements with corporate partners. There can be no assurance
that funds will be available on terms acceptable to the Company, if at all. If
adequate funds are not available, the Company may be required to delay, scale
back or eliminate certain of its product development programs or to license to
others the right to commercialize products or technologies that the Company
would otherwise seek to develop and commercialize itself, any of which would
have a material and adverse effect on the Company.


                                      9


<PAGE>


                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                          (A Development Stage Company)


FACTORS AFFECTING FUTURE OPERATING RESULTS

This Quarterly Report on Form 10-Q contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," "intends,"
and similar expressions are intended to identify forward-looking statements.
There are a number of important factors that could cause the Company's actual
results to differ materially from those indicated by such forward-looking
statements. These factors include, without limitation, those set forth below and
elsewhere in this Quarterly Report on Form 10-Q and in the Section titled
"Business - Factors That May Affect Results" in the Company's Annual Report on
Form 10-K for the year ended December 31, 1999, as filed with the SEC, which
Section is incorporated herein by reference.

The Company is in the early development stage and has been engaged, to date,
primarily in organizational and research and development activities. The Company
has not yet completed the development of, or conducted significant human testing
with respect to, any product. In particular, the Company's AlloMune-TM- and
XenoMune-TM- Systems are based upon approaches which are novel and, to the
Company's knowledge, have never been achieved in humans, including by the
Company. There can be no assurance that any of the Company's products will be
successfully developed, prove to be safe and efficacious in clinical trials,
meet applicable regulatory standards, obtain required regulatory approvals, be
capable of being produced in commercial quantities at reasonable costs or be
successfully marketed.


                                    10


<PAGE>


                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                          (A Development Stage Company)


The Company has a substantial accumulated deficit. The Company expects to incur
losses for at least the next several years and that such losses will increase as
the Company expands its research and development activities. The Company will
require substantial additional funds for its research and product development
programs, operating expenses, the pursuit of regulatory approvals and expansion
of its production, sales and marketing capabilities. Adequate funds for these
purposes, whether through equity or debt financings, collaborative or other
arrangements with corporate partners or from other sources, may not be available
when needed or on terms acceptable to the Company. Insufficient funds could
require the Company to delay, scale back or eliminate certain of its research
and product development programs or to license to third parties to commercialize
products or technologies that the Company would otherwise develop or
commercialize itself.

The Company's strategy for development and commercialization of its products
entails entering into arrangements with third parties. There can be no assurance
that the Company will be able to maintain its existing arrangements or establish
additional arrangements that the Company deems necessary or acceptable to
develop and commercialize its potential pharmaceutical products or that such
arrangements will be successful. If any of the Company's strategic partners were
to breach or terminate its agreement with the Company or otherwise fail to
conduct its collaborative activities successfully in a timely manner, such delay
or termination could have a material adverse effect on the Company's business,
financial condition and results of operations.

Proprietary rights relating to the products of BioTransplant will be protected
from unauthorized use by third parties only to the extent that they are covered
by valid and enforceable patents or are maintained in confidence as trade
secrets. There may be pending or issued third-party patents relating to the
products of BioTransplant and BioTransplant may need to acquire licenses to, or
to contest the validity of, any such patents. It is likely that significant
funds would be required to defend any claim that BioTransplant infringes a
third-party patent. There can be no assurance that any license required under
any such patent would be made available.

Other factors that may affect the Company's future operating results include the
inherent risk of product liability claims which may result from the testing,
marketing and sale of human therapeutic products, risks related to disruptions
in the Company's supply of miniature swine, the Company's fluctuations in
quarterly operating results, the Company's ability to continue to attract and
retain qualified management and scientific staff, risks associated with the
regulatory approval process, and its ability to anticipate or respond adequately
to rapid and significant technological changes that may develop in the field of
human therapeutic products.

ITEM 3.  QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

The Company owns financial instruments that are sensitive to market risks as
part of its investment portfolio. The investment portfolio is used to preserve
the Company's capital until it is required to fund operations, including the
Company's research and development activities. All of these market-risk
sensitive instruments are classified as held-to-maturity and are not held for
trading purposes. The Company does not own derivative financial instruments in
its investment portfolio. The investment portfolio contains instruments that are
subject to the risk of a decline in interest rates.

INTEREST RATE RISK: The Company's investment portfolio includes investment grade
debt instruments. These bonds are subject to interest rate risk, and could
decline in value if interest rates fluctuate. Due to the short duration and
conservative nature of these instruments, the Company does not believe that it
has a material exposure to interest rate risk.


                                     11


<PAGE>




                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                          (A Development Stage Company)

PART II. OTHER INFORMATION

Item 1.       Legal Proceedings
              Response:  None

Item 2.       Changes in Securities
              Response: On February 11, 2000, the Company issued and sold to a
              group of investors an aggregate of 1,215,000 shares of its common
              stock, $.01 par value per share, at a purchase price of $8.00 per
              share, for net proceeds to the Company of approximately $9.0
              million. No person acted as an underwriter with respect to this
              transaction. The Company relied on Regulation D of the Securities
              Act of 1933, as amended, ("the Securities Act") for exemptions
              from the registration requirements of the Securities Act.

Item 3.       Defaults upon Senior Securities
              Response:  None

Item 4.       Submission of Matters to a Vote of Security Holders
              Response:  None

Item 5.       Other Information
              Response:  None

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

a)   Exhibits
     27       Financial Data Schedule.

b)   Reports on Form 8-K
     February 16, 2000


                                      12


<PAGE>


                    BIOTRANSPLANT INCORPORATED AND SUBSIDIARY
                          (A Development Stage Company)


                                   SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                  BioTransplant Incorporated
                                  (Registrant)

Date: May 14, 1999                /S/ ELLIOT LEBOWITZ
                                  -------------------

                                  Elliot Lebowitz
                                  President and Chief Executive Officer
                                  (Principal Executive Officer)

                                  /S/ RICHARD V. CAPASSO

                                  Richard V. Capasso
                                  Vice President, Finance and Treasurer
                                  (Principal Financial and Accounting Officer)


                                      13